Diana Houghton, Group Head of Strategy, Smiths Group PLC
The combined impact of economic, health and geopolitical issues continue to create shockwaves around the world – with some commentators now coining the phrase “polycrisis” to describe their combined effect. And the shifting of tectonic plates on this scale has instigated big megatrends that are shaping the future of the industrial technology sector. I’ll cover just three here:
- responding to the energy transition;
- maintaining a global response to an ever-changing security threat; and
- the insatiable demand for big data.
Energy transitions are not new, they have been part of the rhythm of our socioeconomic history since we discovered the power of fire. But this energy transition is a mega trend on a hitherto never experienced scale and which demands us all to lock arms on a purposeful march to a zero-carbon world. Finding ways to improve the efficiency with which the world consumes energy represents the single greatest simultaneous challenge and opportunity for the industrial technology sector.
The International Renewable Energy Agency has predicted that the energy industry will need to invest $100trn globally over the next three decades in the attempt to achieve a net zero carbon environment. So what sort of trends could that investment look to fund?
- Reducing energy costs - An ongoing focus on reducing energy costs across supply chains and manufacturing processes will enable the industrial technology sector to help customers reduce their carbon footprint, and reduce their own. Tangible examples of these advances include plants moving to LED lighting and (green) electrical process heating alongside other energy efficient applications
- Insulate tight, ventilate right - In the residential housing sector, advances in the growing heat pump market are benefitting heating, ventilation, and air conditioning, driving improved energy efficiency and preventing thermal loss. We expect to see more of a focus on this as the global cost of living crisis continues.
- Industrialising the production of hydrogen from a variety of potential sources. The process of making hydrogen by using methane in natural gas (blue hydrogen) as well as green hydrogen via electrolysis of water are set to grow dramatically in 2023 and beyond, offering cleaner, green energy to help reduce global warming.
- Reducing emissions from traditionally hard to abate sectors such as cement or steel production. The rise of cleaner technologies such as the production of ‘green steel’ will inevitably open the door to a tangible decarbonised future. Given the high levels of greenhouse gases involved in the current process (steel accounts for c. 8% of all global emissions), green steel has the potential to be a huge boon in the race to a clean, sustainable future.
Global safety and security
The constant need to evolve safety and security measures to keep our world safe has rarely been more of an urgent priority for leaders, policy makers and governments worldwide. The world’s growing security needs are underpinned by data, which shows that we are returning to pre-pandemic levels of growth in global air passenger numbers as well as air freight. We identify the following key trends:
- Greater focus on national security - This trend is of long standing and is unlikely ever to diminish. Border authorities work hard to identify threats and contraband and to keep up with the ingenuity of the smugglers who would seek to evade paying duty or break international laws
- Trusted passenger / risk-based screening - Many jurisdictions may begin to introduce programmes to give trusted travellers simpler and faster security procedures – by permitting those who are deemed a low security risk to skip security checkpoints altogether.
- AI and automation in security - Advances in technology and AI will lead to the further automation of security technology, increasing efficiency and decreasing the potential for human error. Through the use of AI and non-AI based algorithms, software enhancements are set to improve, and in some cases further automate, threat detection with increased security screening process efficiency.
- Expansion of security beyond the airport or border - The security and defence agenda is steadily expanding from a primary focus on airports and borders to other urban settings such as office buildings, post rooms, shopping malls, stadia, etc. We expect this trend to continue in 2023 and beyond.
The increased demand for digital connectivity continues apace and the statistics are staggering: global consumption of data is doubling every four years; transmission data rates are doubling every three and a half years; and there were 1,800 satellite launches in 2022 – more than ten times more the number launched just a decade ago. Against this backdrop we see several key themes:
- Faster connectivity - The race to speed up the data transmission rate will continue and technological advances in areas such as optical fibre will continue to permit communication at ever faster speeds, with reduced latency and stronger signals. This will benefit us all as 5G networks continue to roll out globally.
- Improved in-flight experiences - Optical transceivers will help to provide next-generation aviation Wi-Fi on board commercial aircraft across the world making for much better in-flight connectivity in the future.
- Making connections - Better connectivity will also drive improved broadband coverage in more remote areas of countries such as Brazil, Argentina, Colombia, Mexico, and Canada, helping connect the roughly 3 billion people who lack internet access today.
From our vantage point, the global industrial technology sector is set to benefit from these mega trends, creating a series of exciting inflection points, which will inevitably shape future demand. Our planned response to these trends will allow us to continue to preserve, protect and enhance our world. Not just for 2023, but for years and decades to come.
The combined impact of economic, health and geopolitical issues continue to create shockwaves around the world.
And the shifting of tectonic plates on this scale has instigated big megatrends that are shaping the future of the industrial technology sector.
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